The secret of life is honesty and fair dealing. If you can fake that, you've got it made Groucho Marx

I suspect the SEC, FINRA, and CFTC are big fans of Groucho Marx, or at least his observations on fair dealing. How else could they justify turning a blind eye to a global media powerhouse such as Reuters selling early access to market-moving information? How could these authorities not condemn a practice like high-frequency trading (HFT), which causes significant market disruptions on a daily basis and destroys investor confidence?

Why would agencies that are charged with oversight of the most robust capital markets in the world choose to disregard their fiduciary duty? My guess is, as usual, it all comes back to money ... someone getting an early peek at information makes a complete joke of fair markets.

...

Reuters had been selling early access to the University of Michigan's consumer-sentiment report, and his investigative reporting really shed some light on this despicable practice. For a rumored $20,000 per month, an HFT firm could buy access to data that would be released to the rest of the world two seconds later. Eamon, with the help of my friend Eric Hunsader of Nanex, a firm that tracks high-frequency trading and its impact on our financial markets, proved that the HFTs profited mightily from this early look at the market-moving data.

When called out on live television about this practice, neither the University of Michigan nor Reuters said they saw anything wrong with letting a very small number of market participants have access to the reports ahead of the rest of us.

There was a time when the equity markets were vehicles for raising capital to fund long term investment in productive assets such as factories, ships, railroads and mines. Today the equity markets are casinos where the savings of the dwindling middle class are siphoned off to wealthy speculators.

It takes proud, confident and visionary entrepreneurs to build a transcontinental railroad, factories to produce light bulbs or a horseless carriages, and iron steamships to replace wooden boats. What kind of person does it take to operate a computer that trades pools of IRA and 401K money based on insider information? What long lasting productive assets that will enrich current and future generations are being created through these billions of computer trades in nanoseconds? Are we creating real wealth or are the traders simply taking the savings of the masses through fees and market manipulation?

If those who control the capital of a nation are short term speculators and not investors in long term productive assets, what will be the future of that nation?

3
posted on 07/12/2013 11:59:44 PM PDT
by Soul of the South
(Yesterday is gone. Today will be what we make of it.)

That $85 Billion per month of money printing is not for creating new jobs, rather to increase the accounts of Wall Street hedge fund bosses - who also are large campaign cash donors to the dear leaders.

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